Dakshina Kannada Sanathana Dharma Sangha Vs ITO (Exemptions) (Karnataka High Court)
Karnataka HC clarifies that donor’s direction for corpus need not be in writing – AO to verify intent & usage pattern as per Ramakrishna Seva Ashrama” test
Assessee, a religious trust registered u/s 12A, filed appeal against the order of ITAT, Bengaluru dt 19.04.2023 in ITA No.110/Bang/2023 (A.Y. 2017-18). The Trust had received donations claimed as corpus contributions u/s 11(1)(d). AO denied exemption holding that there were no written instructions from donors directing that such donations were to form part of the corpus fund.
CIT(A) confirmed the AO’s view, & ITAT remanded the matter to AO with directions to allow the Assessee to prove that the donations were voluntary contributions towards corpus through supporting evidence.
Assessee contended that Section 11(1)(d) does not mandate a written direction; the intent of the donor can be gathered from surrounding circumstances or utilization pattern. The Tribunal’s direction requiring fresh proof after several years was impractical and contrary to the coordinate Bench ruling in DIT (Exemption) vs Sri Ramakrishna Seva Ashrama [(2013) 357 ITR 731 (Kar.)].
Revenue argued that specific direction from donor is mandatory for treating donations as corpus. In absence of such express direction, every donation cannot automatically assume corpus character merely because the Assessee records it so in its books.
